Lesson 1:
Planning
Am I really ready to buy?
Buying a home offers many
advantages, one of the most significant
being that it allows you to build equity
(ownership) when you pay your mortgage each
month. A common myth is that monthly
mortgage payments are more expensive than
rent. But, in many cases, mortgage payments
can be even less than rent. When considering
homeownership for the first time, you need
to decide whether buying makes financial and
practical sense for you right now or if you
are better off renting. Consider both the
advantages and disadvantages to renting as
well as buying for your particular
situation.
How much “house” can I
afford?
Home ownership is within many
consumers' reach. And the first step toward
finding the right home is to quickly compute
your purchasing power and determine how much
can you afford to pay each month. This saves
you time by allowing you to focus on homes
in your price range.
In addition, you
should consider both the up-front and
ongoing costs associated with purchasing a
home in the planning stage:
Up-front
Costs:
-
Down-payment:
Typically ranges from 3.5-25% of the
cost of the house. The more you can
put down, the greater equity you
will have in your home and the lower
your monthly payment will be. For
down-payments less than 20% you may
also need to pay mortgage insurance.
-
Closing
Costs:
Typically range from 3-6% of the
loan amount depending on your area.
-
On-going
Costs:
Your housing costs can include the
following:
Monthly mortgage payment
Homeowners insurance
Mortgage Insurance, if applicable
Flood Insurance, if applicable
Property taxes
Utilities
Maintenance
Lesson 2 >
